Republished from my contributions to the ID Experts blog.
During this difficult economic time, the problem with scams and fraud is threefold. First, people who are desperate are more willing than ever to “bite” on the lure of convincing scams because of they are under increasing financial stress and pressure. Second, the number of scams and people perpetrating those scams increases during difficult financial times. Third, according to a recent survey by Nationwide Insurance, over half of respondents don’t know if they have enough money to weather fraud. Additionally, “A 2005 Nationwide survey showed the average amount of total charges made using a victim’s identity was $3,968. While most victims were not held responsible for fraudulent charges, 16 percent reported paying an average of $6,440 to cover some or all of the thief’s purchases.”
You may be surprised to find out that spotting a scam it is not as easy as you think. The FTC points out, “[scam] claims are just good enough to be believable; their services and products just practical enough to seem legitimate. Some even try to look like a government agency to enhance their credibility.” Here is a quick rundown of the four most critical issues: Debt, housing, employment and government assistance.
- Credit repair / Debit Negotiation companies
The dirty scam: These companies advertise anything from outlandish claims (“We can remove ANY debt from your credit report!”) to carefully veiled suggestions (“We know the tricks that your credit card company doesn’t want you to know”). Almost all of them require an upfront fee, and almost none of them deliver on their promises. The IRS highlighted concerns in this report, stating, “Many credit counseling organizations provide valuable advice, education and assistance to those seeking to better manage their debt. But an increasing number of complaints to federal and state agencies indicate that some organizations are engaging in questionable activities.” The report includes some handy tips for detecting deceptive companies. The FTC also has some great advice for those “Knee Deep in Debt” or considering one of these companies, as well as the Better Business Bureau. These reports cover dirty scams and provide detailed information about the process, general advice on debt practices, and resources for assistance.
The clean scene: The U.S. Department of Justice’s U.S. Trustee Program provides a list of government-approved credit counseling agencies. The National Foundation for Consumer Counseling provides a list of member agencies online at www.nfcc.org or call 1-800-388-2227 for 24-hour automated office listings. Look over this Fiscal Fitness: Choosing a Credit Counselor document from the FTC, and this new site discussing debt and scams including vehicle repossession, advance fee loans, ‘anyone can get credit’ card offers, debt negotiation and other scams that are increasing with the economic difficulty.
- Home refinance or foreclosure scams, loan modification programs
The dirty scam: Taking advantage of the panic in the market, thieves and scammers are contacting victims for loan negotiation, refinance or foreclosure scams. Using complete lies and half-lies, they never deliver what they promise. They could be pretending to offer assistance for your current situation, or offering you a remarkable deal on a foreclosed property. It could be a rent-to-buy or bait-and-switch scam. Victims find they lose money, turn over personal information and/or complete documents that result in damages and financial loss. They can represent legitimate companies with bad business practices, or complete frauds pretending to be from the government ready to inform you how you can benefit from the economic stimulus package. For more information on these types of scams and the red flags to look for, read the highlight by the FTC here.
The clean scene: Be very suspicious of these offers. Check with the attorney general in your state before dealing with any company or person offering assistance. Details on the Federal assistance available to homeowners can be found at http://www.makinghomeaffordable.gov/ . Or, you can contact the Homeownership Preservation Foundation's national hotline at 1-888-995-HOPE. They provide free bilingual assistance to help homeowners avoid foreclosure. HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. Read more about HOPE NOW at www.hopenow.com. You can also check with the US Department of Housing and Urban Development, and the Federal Reserve’s Foreclosure Resources for Customers. The FTC and Freddie Mac both offer helpful sites for those who are feeling the pressure of mortgage payment or trying to avoiding foreclosure. The Federal Reserve also recommends checking out NeighborWorks. You can also listen to a recent NPR broadcast about these scams.
- Employment fraud, classifieds fraud
The dirty scam: Unfortunately, finding a job poses many risks. First, you must be careful about the amount of personal information you place on a resume or online application. Remember that disclosing your social security number and birth date should only be necessary when they are ready to hire you and complete tax information. Even seemingly harmless details, such as the exact dates and companies you worked for, the colleges you attended, and your address, can result in identity theft or professional impersonation (when a thief takes the details of your professional life and presents them as his or her own to land a job). Additionally, you must exercise caution about the ads you respond to and the contacts you receive offering a job. A rule of thumb to remember: if it sounds too good to be true, it probably is. Avoid any job that asks you to cash checks, wire money, or use Western Union on the job. Let’s start with a short list of job scams (and the links to resources regarding them)… ‘Placement service’ for government jobs, head hunters, temporary employment, work-at-home or online jobs, and classifieds fraud.
The clean scene: Resources for government jobs are USAJOBS, US Postal Service Employment, FirstGov, and the Department of Labor. According to the FTC, “Some ads may direct you to call a toll-free 800-number. Once you're connected, you may be switched to a pay-per-call 900-number without your knowledge, or you may be asked to call a 900-number without a proper fee disclosure. Both practices are against the law… Many terms, such as employment agency, personnel placement service, executive search firm, or executive counseling service are used interchangeably. Find out what services a firm offers, how much the services cost, and who pays. If you're required to pay the fee, find out what you'll owe if the employment service fails to find you a job or any leads.” Check suspicious opportunities with the Better Business Bureau, your state Attorney General’s Office, or consumer protection agency. Read these tips from ScamBusters. Find online job hunting privacy tips and a background check fact sheet at Privacy Rights Clearinghouse. As many people are trying to find extra income, we would like to caution people about responses to their classified or craigslist ads. If someone is offering to pay you more than you asked for a service or item don’t do it! Usually they create an elaborate reason that they need you to cash a check and then wire the extra funds to them, or they get you to provide your account number so they can empty your account.
- Financial assistance from the government
The dirty scam: Letters, phone calls, emails, text messages- there is nothing that they won’t try! Websites and representatives claim to be able to access “secret” government money and help you apply for it. Usually they want an upfront “processing fee” or sometimes just your personal information. The FTC describes it as, “An email, online ad, or website says you’re eligible to get an economic stimulus payment. You just have to send back a form or submit one online to get it. The message might appear to come from a rebate company or look like it’s straight from the Internal Revenue Service (IRS).
There’s more than one way to perpetuate a stimulus scam. Some scam artists ask you to send a small processing fee, supposedly to get a much larger check in return. That’s money you’ll never see again. Others skip the fee, and instead, ask for your bank account number so they can ‘deposit’ your check. Then, they use the information to clean out your account or open new ones using your identifying information.Some stimulus scams encourage you to click on links, open attached forms, or call phony toll-free numbers. But simply clicking the link or opening the document can install harmful software, like spyware, on your computer. The result could be your personal information ending up in the hands of an identity thief. If you get a message offering you money from the stimulus program in exchange for your personal information, ignore it, delete it, or throw it out. The IRS doesn’t send emails asking for personal information, and rebate companies claiming to have stimulus payments for you should not be trusted, regardless of how plausible the script sounds or how official the forms look.”
The clean scene: Legitimate information about government grants and assistance can be found at www.recovery.wa.gov, www.grants.gov, www.studentaid.ed.gov, www.govbenefits.gov and www.sba.gov. Information for stimulus payments and refunds can be obtained directly from IRS.gov. Do NOT click on any hyperlink contained in an email, type the address directly into your browser. You can check up on your stimulus checks here.
If you are prepared, think critically, and proceed with caution, you should be able to determine the scams from the real deal. There are good habits you can form during this time as well. Using cash as a way to limit spending, and limit the number of places you use your card can help your wallet and prevent identity theft. As the economy starts to improve and the panic resides remember that identity thieves don’t just go away. Accounts can be opened now that will not appear on your report for years. Protection now, and in the future, is vital to keeping your identity safe
A special thank you to Washington's Attorney General's office and many other AG offices for providing much of this material.
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